Thursday, August 04, 2011

Life in the Sweet Spot of Our New Non-Economy

If things get bad enough, they can turn out pretty well.

That’s the lesson my friend Dave learned recently. A year ago he was in deep trouble, struggling to pay a three thousand dollar a month mortgage, one late payment away from foreclosure, his interest rate steadily rising despite his faultless payment record -- and the price that consistency had exacted on the rest of his life. Sometimes he used credit cards to pay the mortgage -- now he had maxed all out all the cards and those interest rates were jacking up every time he missed a payment. A storm took most of the shingles off his roof, but of course the insurance company wouldn’t pay a cent to fix it. “Your house would have to burn down to get a dime out of this policy” an unusually frank insurance agent informed him wearily one afternoon.

Since he can’t sell the house with a storm-damaged roof, the thought seemed practical for one crazy second. No, he didn’t turn to arson, but I could understand the temptation. All attempts to sell the house had unraveled. The price was wrong. In our deliriously upscale resort community, people buy and sell 5 and 6 million dollar estates all the time. The houses on the market for million or two languish. No billionaire wants a tract house in a cruddy subdivision, unless it’s as a barracks for his restaurant crew. The people who do want Dave’s house can’t get a loan because the banks aren't making loans. It’s more profitable to just sit on the money the tax payers gave them and write out bonus checks. He thought about selling the place as a ‘covenant house’ – be used as affordable housing; with the sale money he could build a cottage on the property and live there. But that deal fell through.

Dave conceived desperate plans – get his eviction recoded on video and upload it to youTube and shame the loan sharks; to just walk away, as so many people in the mid-west have been doing.

But a lot can change in a year.

The main change was a revelation so grotesque and bizarre that it topped everything else in the slow-mo economic catastrophe to date: no one knew who actually owned his house. The mortgage had been bought and sold and packaged and repackaged so many times, with deeds signed by robots, and flipped for a quick buck by such an unsavory line up of con men and hustlers, that it had more or less ceased to exist. That meant he couldn’t sell his house, even if he found a buyer. But so what? It also meant that there was no need to pay the mortgage any more. No one could prove they owned the paper.

So he just stopped.

He got toothless threatening letters for a while. Recently they tried a different tack, announcing a fifty percent cut in his payment (something he’d been requesting for years). “Good news!’ the letter announced. But one phone call to his lawyer clarified this sudden advent of generosity and happy tidings. As soon as Dave wrote the first check he would be tacitly agreeing that this new bunch of crooks were the legally constituted owners of his debt. He dropped the letter in the trash.

Nice try. But Dave learned a vital lesson of our new non-economy: when a letter from the bank says “Good news”, run for the hills.

So now, thanks to the grunting, snout-shoveling greed of dozens of stupid careless trust fund truffle pigs. he’s living in his house (it’s as much his as anyone’s) for free. But it didn’t stop there. Dave developed a little swagger. When he got the next harassing phone call from the credit card company, he laid it on the line: he wasn’t going to pay them a dime. “Read your own terms and conditions, buddy. This is an ‘unsecured debt’. That means you're screwed." The man from Visa told him the consequences would be dire if he followed through with this private default. For instance? It would ruin his credit rating.

Dave just laughed. His credit rating? That little guy had been dead and buried for months, as dead as a seal washed up on the beach, dead as his old truck with the seized engine block. “Do your worst, pal,” Dave said, hanging up,

So now he lives in his house with no mortgage, pays nothing on his credit cards and finally has enough money to shop for food in the most over-priced community in the Eastern seaboard. He even goes out to dinner sometimes – cash only. He’s actually benefiting from the financial meltdown, and the uncontrolled fiscal feeding frenzy that caused it.